The wealthy are in the crosshairs again. From suspicious columnists to populist politicians, debating the proper tax rate for individuals with more than a little extra disposable spending power has again become fashionable.
So it goes after a long bull market that’s only suffered brief interruptions over the past generation. No wonder, then, that lots of people have made lots of money, a trend that starts to skew wealth generation in favor of those who more than an average share of it. Add to the mix the drop in tax rates over the past few decades and it all adds up to what could be thought of as a golden age for minting money.
That, at least, is how it looks in the rearview mirror. And who can argue that some elites have enjoyed a tax loophole here or there that looks suspect to fair-minded citizens of modest means? But before we go off the deep end and push the pendulum too far in the opposite direction, perhaps it’s time to step back and consider the big picture in an effort to optimize government levies so that they maximize economic growth while delivering the requisite services that we, as a society, deem appropriate. And while we’re at it, the United States needs tax reform if only to simplify the mess that otherwise passes as the current tax code.
But we digress. The body politic sees the tax code as something more than a source of revenue. For some, there’s a moral issue here, namely: How best to serve the wants and aims of the society without killing the golden economic goose in the process? No, we won’t even begin to tackle such a question on these digital pages. At least not today.
But in the interest of sparking a wider debate, we turn to a conversation your editor had with one Hunter Lewis, a co-founder of Cambridge Associates, a global investment consultancy, published in the November issue of Wealth Manager. In his recently published book (Are the Rich Necessary) he makes a case for tweaking the tax code to promote more–much more–charitable giving by those who generally suffer the upper levels of tax rates. You may or may not find the author’s arguments compelling, but they’re as good a place as any to start a (hopefully) constructive debate for what promises to be a topical issue in 2008. To jump on the debating bandwagon, click here.